X0202 3 2004-12-07 0 0000906282 MTM Technologies, Inc. MTMC 0001293522 Constellation Ventures Management II, LLC 383 MADISON AVENUE NEW YORK NY 10179 0 0 1 0 Series A-3 Convertible Preferred Stock 3.25 2004-12-07 Common Stock 960068 I By Constellation Venture Capital II, LP Series A-3 Convertible Preferred Stock 3.25 2004-12-07 Common Stock 510903 I By Constellation Venture Capital Offshore II, LP Series A-3 Convertible Preferred Stock 3.25 2004-12-07 Common Stock 428131 I By The BSC Employee Fund VI, L.P. Common Stock Warrants (Right to Buy) 4.0625 2004-12-07 2008-12-07 Common Stock 192014 I By Constellation Venture Capital II, LP Common Stock Warrants (Right to Buy) 4.0625 2004-12-07 2008-12-07 Common Stock 102181 I By Constellation Venture Capital Offshore II, LP Common Stock Warrants (Right to Buy) 4.0625 2004-12-07 2008-12-07 Common Stock 85626 I By The BSC Employee Fund VI, L.P. The Series A-3 Preferred Stock (the "Series A Preferred Stock") is convertible into Common Stock at any time at the election of the individual holders of the Series A Preferred Stock, initially at a ratio of one share of Common Stock for each share of Series A Preferred Stock and subject to adjustments for certain dilutive equity issuances and for stock splits, stock dividends and similar events. After the date that is 18 months following the most recent date of issuance of the Series A Preferred Stock, all outstanding shares of Series A Preferred Stock will automatically convert into Common Stock at the applicable conversion rate then in effect on the date on which the weighted average closing price of the Common Stock for the immediately preceding 60 consecutive trading days exceeds four times the weighted average of the applicable conversion price then in effect for the Series A Preferred Stock. No shares of Series A Preferred Stock will be automatically converted unless at the time of the proposed conversion, an effective registration statement is on file with the SEC with respect to the Common Stock issuable (i) to the holders of the Series A Preferred Stock upon conversion of the Series A Preferred Stock and (ii) to the holders of the Warrants upon exercise of the Warrants (the "Underlying Shares"), and such shares of Common Stock have been listed on the Nasdaq Stock Market or other specified national stock exchange. The purchase price of the Series A-3 Preferred Stock is subject to adjustment for stock splits, stock dividends and other similar events. The Reporting Person is the sole general partner of Constellation Venture Capital II, L.P., the sole general partner of Constellation Venture Capital Offshore II, L.P. and one of two general partners of The BSC Employee Fund VI, L.P. The Reporting Person disclaims beneficial ownership of such securities except to the extent of its pecuniary interest in the securities held by those entities. The exercise price of the Warrants is subject to adjustment for stock splits, stock dividends and similar events. Cashless exercise is permitted. Clifford H. Friedman, Senior Managing Director of Bear Stearns Asset Management Inc., the Managing Member of Constellation Ventures Management II, L.L.C. 2004-12-14